A subsidy of $1,500 per fortnight per employee, administered by the ATO, will be paid to businesses that have experienced a downturn of more than 30% (50% for businesses over $1bn).

To be a part of the subsidy, employers will need to ensure that their employees receive at least $1,500 per fortnight (before tax). See the example below.

Eligibility

There are two levels of eligibility; for employers and employees.

Eligible employers are those with:

Turnover below $1bn that have experienced a reduction in turnoverof more than 30% relative to a comparable period 12 months ago (of at least a month); or

Turnover of $1bn or more that have experienced a reduction in turnover of more than 50% relative to a comparable period 12 months ago (of at least a month); and

Are not subject to the Major Bank Levy.

Sole traders and the self-employed with an ABN, and not-for-profits (including charities) that meet the turnover tests are eligible for the JobKeeper payment.

Eligible employees are those who:

Were employed by the relevant employer at 1 March 2020; and

Are currently employed by the employer (including those who have been stood down or re-hired); and

Are full time, part-time, or long term casuals (a casual employee employed on a regular basis for 12 months as at 1 March); and

Are at least 16 years of age; and

Are an Australian citizen, hold a permanent visa, are a Protected Special Category Visa Holder, a non-protected Special Category Visa Holder who has been residing continually in Australia for 10 years or more, or a Special Category (Subclass 444) Visa Holder; and

Are not in receipt of a JobKeeper Payment from another employer.

While it appears that businesses without employees can potentially qualify for JobKeeper Payments, it is not clear at this stage what conditions will need to be satisfied.

How the support is calculated

The ATO will administer this program and will make the $1,500 payments based on payroll information. The payments will be made monthly in arrears, so it is essential that you ensure your business and your employees continually meet the eligibility criteria.

The business will continue to receive the payments for eligible employees while they are eligible for the payments. While the program is expected to run for 6 months, payments will stop if the employee is no longer employed by the relevant employer.

How the support is provided

To access the JobKeeper subsidy, you should talk to us to assist you with the registration process, calculations and ongoing management of the scheme.

If you want to manage the process yourself, you must:

Register

Applications are not yet open. However, you should register your intent to apply for the JobKeeper subsidy with the ATO (here). The ATO will provide you with regular updates and advise you when you can lodge your application

Assess turnover

Ensure you have an accurate record of your revenue for the 2018-19 income year and for the 2019-20 year to date

Ensure you keep an accurate record of revenue from March 2020 onwards

Compare your revenue for the whole of March 2019 with the whole of March 2020

Measure the % decline in your revenue and ensure it has declined by more than 30%

If you are not eligible in March, you may become eligible in another month

Identify eligible employees

Nominate the employees eligible for the JobKeeper payments – you will need to provide this information to the ATO and keep that information up to date each month. The ATO will use Single Touch Payroll to prepopulate the information in most cases.

Notify all eligible employees that they are receiving a JobKeeper payment. Employees can only be registered with one employer.

Pay eligible employees at least $1,500 per fortnight (before tax). If an employee normally receives $1,500 or more per fortnight before tax the employee should continue to receive their regular income.

Pay superannuation guarantee on normal salary and wages amounts paid to employees. If the employee normally receives less than $1,500 per fortnight before tax, the employer can decide whether to pay superannuation on the additional amount that is paid as a result of the JobKeeper program.

Sole traders and the self-employed can register their interest in applying for the JobKeeper payment with the ATO. These businesses will need to provide an ABN for the business, nominate an individual to receive the payment, provide the individual’s TFN and declare their continued eligibility for the payments. Payments will be monthly to the individual’s bank account. This is the first government assistance for sole traders and self-employed. Please contact us to make sure you receive this help.

Example

Adam owns a real estate business with two employees. The business is still operating at this stage but Adam expects that turnover will decline by more than 30% in in the coming months. The employees are:

Employee

Employment type

Salary per fortnight (before tax)

Anne

Full-time

$3,000

Nick

Part-time

$1,000

Both Anne and Nick are still working in the business.

Adam registers his interest in the JobKeeper scheme (from 30 March 2020), then applies to the ATO providing details of his eligible employees. Adam also advises Anne and Nick that he has nominated them as eligible employees to receive the payment. Adam will provide information to the ATO on a monthly basis and receive the payment monthly in arrears.

Adam’s business is eligible to receive the JobKeeper Payment for each employee.

For Anne, the business will:

· Continue to pay Anne her full-time salary of $3,000 per fortnight before tax,

Second Stimulus Package COVID- 19

The Second $66.1 bn Stimulus Package: What You Need To Know

The Government yesterday released a second, far reaching $66.1 bn stimulus package that boosts income support payments, introduces targeted changes to the superannuation rules, provides cash flow support of up to $100,000 for small business employers, and relaxes corporate insolvency laws.

The stimulus measures are not yet legislated. Parliament will reconvene on Monday 23 March.

The Prime Minister has warned that there are no “quick solutions” and that business should prepare for 6 months of disruption.

In Summary

Business

Tax-free payments up to $100,000 for small business and not-for-profit employers. An increase in the previously announced initial tax-free payments for employers to a maximum of $50,000. In addition to this, a second round of payments will be made up to a maximum of $50,000, accessible from July 2020.

Solvency safety net – temporary 6 month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000, and an increase in the time companies have to respond from 21 days to 6 months. Directors also are provided with temporary relief from personal liability for trading while insolvent for 6 months.

Access to working capital – Introduction of a Coronavirus SME guarantee scheme protecting financial institutions by guaranteeing 50% of new loans to SMEs.

Sole traders and self-employed eligible for Jobseeker payment – the eligibility criteria to access income support relaxed for the self-employed and sole traders.

Early release of superannuation – individuals in financial distress able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21. The withdrawals will be tax-free and will not affect Centrelink or Veterans’ Affairs payments.

Temporary reduction in minimum superannuation draw down rates – superannuation minimum drawdown requirements for account based pensions and similar products reduced by 50% in 2019-20 and 2020-21.

Deeming rates reduced – from 1 May, superannuation deeming rates reduced further to a lower rate of 0.25% and upper rate of 2.25%.

Second Stimulus Package COVID- 19

Support for business

Tax-free payments up to $100,000 for employers

Eligibility: Small and medium business entity employers and not-for-profit entities, with an aggregated annual turnover under $50 million.

The Government has increased the previously announced measures to provide cash flow support to business.

Now, eligible businesses with a turnover of less than $50 million will initially be able to access tax-free cash flow support, with the minimum amount being increased to $10,000 and the maximum amount increased to $50,000 (previously $2,000 to $25,000). However, additional support will be provided in the July – October 2020 period so that eligible entities will receive total minimum support of $20,000 and up to $100,000.

In order for a business to qualify for this support it must have been established prior to 12 March 2020. The rules are more flexible for charities because the Government recognises that new charities might be established in response to the pandemic.

The cash flow support measures will be provided in the form of a credit in the activity statement system. The support will be provided in two phases.

The first phase ensures that eligible employers receive a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees during the relevant period, up to the maximum amount of $50,000.

The second phase ensures that eligible employers receive another series of credits, equal to the credits that were received under the first phase. For example, if a business received $40,000 of credits in the first phase it will receive a further $40,000 of credits in the second phase. These additional credits will be spread over two or four activity statement periods, depending on whether the employer lodges on a quarterly or monthly basis.

If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $10,000 will be made in the first phase and a further payment of $10,000 will be made in the second phase.

The credits are automatically calculated by the ATO and employers will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.

Businesses that lodge activity statements on a quarterly basis will be eligible to receive credits in the first phase for the quarters ending March 2020 and June 2020. Credits in the second phase will be available for the quarters ending June 2020 and September 2020. The minimum $10,000 payment will be applied to the first lodgement.

Business that lodge on a monthly basis will be eligible for the credits in the first phase for the March 2020, April 2020, May 2020 and June 2020 lodgements. Credits in the second phase will be available for the June 2020, July 2020, August 2020 and September lodgments. The minimum $10,000 payment will be applied to the first lodgement.

Eligibility for the measure will be based on prior year turnover. We will have to wait for the legislation for the finer details.

Not-for-profit employers, including charities, with an aggregated turnover under $50 million will also be able to access the cash flow support.

Solvency safety net

A safety net has been put in place to protect businesses in temporary financial distress as a result of the pandemic by lessening the threat of actions that could unnecessarily push them into insolvency and force the winding up of the business. These include:

A temporary 6 month increase to the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000.

The time a company has to respond to statutory demands will increase from 21 days to 6 months.

For 6 months, directors will be provided with temporary relief from personal liability for trading while insolvent.

See also bankruptcy safety net below

It will be more important than ever for business to stay on top of their debtors.

Debts incurred will still be payable by the business. Only those debts incurred in the ordinary course of the business will be subject to the safety net measures.

Temporary relief from Corporations Act requirements

The Treasurer has been given a temporary instrument-making power to amend the Corporations Act to provide relief or modifications to specific compliance obligations.

ASIC has announced measures for those companies with a 31 December financial year that need to hold their AGMs by 31 May 2020, providing a two month no action period and enabling hybrid virtual AGMs.

Individuals

Early release of superannuation

From mid-April, individuals in financial distress will be able to access up to $10,000 of their superannuation in 2019-20, and a further $10,000 in 2020-21. The withdrawals will be tax free and will not affect Centrelink or Veterans’ Affairs payments.

To be eligible to access your superannuation you need to meet the following requirements:

you are unemployed; or

you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or

on or after 1 January 2020:

you were made redundant; or

your working hours were reduced by 20% or more; or

if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20% or more.

For those eligible to access their superannuation, you can apply directly to the ATO through the myGov website from mid-April.

Time limited fortnightly $550 ‘coronavirus supplement’

For the next 6 months, the Government is introducing a new Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients in the eligible payment categories.

The payment will be made to those receiving:

Jobseeker payment (and those transitioning to the jobseeker payment)

Youth allowance jobseeker

Parenting payment

Farm household allowance

Special benefits recipients

In addition, eligibility to income support payments will be expanded to:

Permanent employees who are stood down or lose their job

Casual workers

Sole traders

The self-employed

Contract workers who meet the income test

The Government notes that these criteria could include those required to care for someone affected by the Coronavirus.

Asset testing has also been reduced and will be waived for 6 months. Income testing will still apply.

The payment is not available if you have access to any employer entitlements such as annual or sick leave or income protection insurance.

Second $750 payment to households

The Government is now providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders residing in Australia (see the full list here). The payment will be exempt from taxation and will not count as income for the purposes of Social Security, Farm Household Allowance and Veteran payments.

Payment 1 from 31 March 2020 (previously announced on 12 March): Available to people who are eligible payment recipients and concession card holders at any time between 12 March 2020 to 13 April 2020;

Payment 2 from 13 July 2020: Available to people who are eligible payment recipients and concession card holders on 10 July 2020.

The payments will be made automatically to those that meet the criteria.

Bankruptcy safety net

A temporary 6 month increase to the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will increase from $5,000 to $20,000. In addition, the time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to six months.

Where someone declares their intention to enter voluntary bankruptcy, the period of protection from unsecured creditors will be extended from 21 days to 6 months.

Benefits during emergencies exempt from FBT

If your business assists employees during an emergency, for example floods, bushfires etc., then fringe benefits tax is unlikely to apply to the assistance you provide. While we doubt anyone would be thinking about FBT during a crisis, it’s good to know that the tax system does not disadvantage your generosity.

The exemption applies in a range of scenarios including natural disasters, accidents, serious illness, armed conflict, or civil disturbances

As an employer you might provide benefits such as meals, temporary accommodation, clothing or transport, etc.

A Budget, an election, and the legislation that hasn't made it through.

A budget, an election, and the legislation that hasnlt made it through.

The February 2019 Parliamentary sitting days were the last opportunity before the Federal Budget for the Government to introduce or push through new legislation. Next month, on 2 April, Parliament reconvenes for the Federal Budget and it’s likely that an election will be called very soon after that (18 May 2019 is the last possible date for the election of the House of Representatives). Any legislation that has not passed when the election is called basically goes back to the drawing board and may never be enacted.

With the focus of politicians firmly on the impending election and the asylum seeker debate, and the Government now in an untenable position following the loss of its majority in the lower house, tidying up outstanding business legislation was not the priority in February, and as a result, several key pieces of legislation are in limbo.

Extension of the $20k instant asset write-off

Originally introduced in the 2015-16 Budget, the popular $20k instant asset write-off has been extended across consecutive years. At present, small businesses are able to immediately deduct purchases of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2019.

In a pre-election sweetener, the Government announced that the threshold for the small business instant asset write-off will increase to $25,000 and the timeframe to claim the increased write-off extended from 29 January 2019 until 30 June 2020.

The Bill enabling the changes was rushed into Parliament in February. While the upcoming Budget will provision for the measure, the outcome of the next election may determine whether the change comes to fruition.

Removing the CGT main residence exemption for non-residents

Currently, individuals are generally not subject to capital gains tax (CGT) on the sale of the home they treat as their main residence. If the home was your main residence for only part of the ownership period or if the home is used to produce income (for example, you use part of the home as business premises or rent out part of the property), then a partial exemption may be available. In addition, if you move out of your home and you don’t claim any other residence as your main residence, then you can continue to treat the home as your main residence for up to six years if you rent it out or indefinitely if you don’t rent it out (the ‘absence rule’).

The main residence exemption is currently available to individuals who are residents, non-residents, and temporary residents for tax purposes.

In the 2017-18 Federal Budget, the Government announced that non-residents and temporary residents would no longer have access to the main residence exemption under the CGT rules. The Government later confirmed that the exemption would still be available to temporary residents as long as they were residents of Australia under the normal residency tests.

The proposed rules would prevent non-residents from claiming the main residence exemption even if they were a resident for some (or even most) of the ownership period. The proposed rules do not allow for partial exemptions. If, however, you are an Australian resident at the time you sell, then the normal main residence exemption rules apply, even if you were a non-resident for some or most of the ownership period.

The draft laws become even more complex when dealing with deceased estates.

Under the proposed new laws, the transitional period for non-residents to make arrangements to either sell their property or restructure their affairs, ends on 30 June 2019.

The transitional period applies if the property was held at 9 May 2017 and is sold under a contract entered into on or before 30 June 2019. If there is no contract of sale in place by 30 June 2019, then the main residence exemption will not apply if the individual is a non-resident when the sale takes place.

With the legislation stalled in the Senate, non-residents are in a precarious scenario. If the legislation is enacted with the current deadlines, it will now be difficult to sell any property in time to meet the transitional period requirements.

We expect that the timing of the main residence exemption amendments will be addressed in the upcoming Federal budget. We will keep you posted!

Employer Superannuation Guarantee amnesty

Back in May 2018, the Government announced an amnesty for employers who had fallen behind with their superannuation guarantee (SG) obligations. Under the amnesty, employers could catch up or “self correct” outstanding SG payments for any period from 1 July 1992 up to 31 March 2018. The intent was to reduce the estimated $2.85 billion owed by employers in late or missing SG payments.

Running from 24 May 2018 for 12 months, the amnesty was to provide relief from some of the punitive penalties that normally apply to late SG payments. To take advantage of the amnesty, employers were to make voluntary disclosures to the ATO about outstanding payments.

But, the legislation enabling the amnesty has stalled in the Senate. Up until recently, the ATO was encouraging employers to make voluntary disclosures with the view that when the legislation passed Parliament, the amnesty would be applied. However, any employer who made a voluntary disclosure to the ATO will not benefit from the reduced punitive penalties unless the legislation passes, which at this stage, is highly unlikely in its current form.

Further, the Tax Commissioner has no discretion under the law to reduce the penalties applied to employers in this scenario, so if the legislation doesn’t pass, then there isn’t much the ATO can do to soften the blow.

SMSF membership limit changes

Rushed into Parliament before the break was a bill enacting the Government’s 2018-19 Budget measure increasing the maximum number of allowable members in a Self Managed Superannuation Fund from four to six. The measure is before the Parliament but unlikely to be addressed before the election.

Superannuation guarantee and salary sacrifice

The Bill amending how superannuation guarantee is calculated, to ensure that an individual’s salary sacrifice contributions cannot be used to reduce an employer’s minimum superannuation guarantee (SG) contributions, appears to have stalled. The Bill has not progressed since November 2017. At present, the minimum amount of SG an employer is required to pay is based on an employee’s ordinary time earnings. As entering into a salary sacrifice arrangement reduces the employee's ordinary time earnings, it reduces the amount of SG that an employer is required to pay.

Craft beer excise changes

Australia’s growing craft beer industry were promised changes to the way excise applies to their product. The amendments extend the concessional excise duty rates that currently applying to draught beer in kegs and other containers exceeding 48 litres to smaller containers of 8 litres or more if these containers are designed for dispensing from commercial premises. Once again, this measure made it into Parliament but is unlikely to be addressed before the next election.

Future Drought Fund

The Future Drought Fund is a dedicated investment vehicle to secure a revenue stream for “drought resilience, preparedness and response”. The fund uses $3.9 billion in uncommitted funds from the Building Australia Fund. The Bill to create the fund made it into Parliament in November 2018 and passed the lower house on the last sitting day in February. The future of the fund is in the hands of whoever wins the next election.

Curbing payday loans and rent-to-buy schemes

The Bill curbing payday lending is unusual because it was introduced in the last sitting period by the Labor Party who have in effect, introduced the Government’s own exposure draft reforms from 2017. The reforms amend the consumer credit code to impose caps on total payments made under a consumer lease, require small amount credit contracts to have equal repayments and interval periods, remove the ability for small loan providers to charge monthly fees if the loan is fully paid out before the term of the loan expires, prevent door to door selling, and strengthen compliance. In the wake of the Royal Commission and the recent Senate enquiry into payday lending, there will be reform, it’s just a question of when.

Tax Office changes to how motor vehicle deductions can be claimed for utes and other motor vehicles in tax returns can affect many. The only ways to claim vehicle expenses now are either using the kilometre rate method which allows up to 5000km to be claimed or the log book method.

Gone are the days when ute expenses could be claimed as 100% deductible if there was only incidental personal use. The Tax Office is requiring log books now for ute claims.

If a vehicle has depreciation, a loan and has high business or work use, then the log book method most likely would be the better outcome. However, you should speak to your accountant for the best result for you. Audit action we have seen has shown that the ATO to be very aggressive in even circumstances where it is clear that the ute was used for work purposes only. If there is no log book, only the kilometre rate, based on a reasonable estimate, would be able to be claimed.

As well, carting tools and equipment home each day does not make the journey a tax deduction. There has to be no safe place at work to leave the valuable goods, no insurance or replacement by the employer if stolen.

So… if there is no log book, grab one and start it now. It needs to be for a 12 week continuous period. It is no good just saying that the journey was for work purposes. Specific details need to be entered. We have seen the ATO refuse to accept log books without this detail.

Employers with poor super guarantee payment history outed

Employers with poor super guarantee payment history outed

Underpayment or non-payment of superannuation guarantee (SG) is a big issue. New laws will enable the ATO to advise employees (or former employees) of their employer’s poor SG payment and reporting history.

If an employer makes a complaint to the ATO, then a taxation officer is able to make a record or advise the employee about a failure or suspected failure by their employer or former employer to comply with their SG obligations. They can also share the Tax Commissioner’s response to the complaint. So, if the Commissioner finds there is a problem with SG payments, they can disclose this information to the complainant.

If you have any concerns about how impending legislation may impact on you, please give the team a call and we would be happy to clarify your position.

Under 20 Employees? What you need to do.

1 July 2019 is not that far away. If your business does not already use STP compliant software, you may need to upgrade your systems or implement new ones.

STP requires PAYG withholding and superannuation contribution details to be reported to the ATO as payments are made to employees or superannuation funds.

When it comes to PAYG withholding, employers will report details of salary and wages paid to employees as well as the PAYG withholding amount at the time the payment is made to the employee. Employers have the option of paying the PAYG withholding liability at the same time, although this is not compulsory.

What needs to be reported:

Salary & wages

Director remuneration

Return to work payments to individuals

Employment termination payments (ETPs) – not compulsory if the employee has died

Unused leave payments

Parental leave pay

Payments to office holders

Payments to religious practitioners

Superannuation contributions (at the time the payment is made to the fund)

Single Touch Payroll extended to all employers

Single touch payroll extended to all employers

From 1 July 2019, single touch payroll – the direct reporting of salary and wages, PAYG withholding and superannuation contribution information to the ATO – will apply to all employers. What employers need to report will also be extended to include certain salary sacrificed amounts.

Employers with 20 or more employees have been required to use single touch payroll since 1 July 2018. The new rules push all businesses with employees into the single touch payroll system. This includes the situation where payments are made to the owners of the business in the form of salary, wages or directors fees.

The ATO has asked software providers to provide new low- cost payroll options for micro employers (1-4 employees). MYOB and Xero have announced new $10 per month offerings (limited to 4 employees) with other software houses following suit.

In this blog, we invite you to celebrate the small successes and take a look at the outlook for 2018. We also explore how you can make a difference in 2018 to improve your profitability and build more value into your business. How? By thinking big and planning for success through small but smart changes.

What is your business worth? Will it be enough to fund your retirement?

You might dream of spending your retirement on luxury cruises or perfecting your golf swing, but without a plan to exit your business, your “dream” may be just that.

Knowing what you want to do with your business in the future can seem challenging, but it’s a challenge you shouldn’t put off if you want to see your dreams come to fruition.

Too many business owners fail to develop a plan for exiting or leaving their business, and they often end up with a lifestyle that doesn’t match their goals.

Getting your business ready for the future - whether that involves selling up and paying for your retirement or confidently handing it over to the next generation - means knowing what your business is worth today and creating an exit or succession plan.

It’s not easy being a business owner. There are plenty of challenges that can keep you up at night, but none of them will make you toss and turn more than dealing with financial issues. And one of the most pressing is cash flow management.

Add to that collecting money, employing the right people and marketing and sales, and you have a few more reasons to stay awake staring at the ceiling. But did you know these challenges can also have an impact on your cash flow?

Too many business owners focus on cash flow but don’t necessarily understand the connection to these common hurdles. If your collections, employees and sales and marketing aren’t working like a fine-tuned machine, you could be staring down the barrel of cash flow issues.

In part one of a two-part blog, we take a look at the first two key business challenges and what you can do about them.

Issue 1: Cash flow

When money is going out but not necessarily coming in at the same rate, you might worry there won’t be enough in the bank to pay wages, suppliers, loans, tax or even super. You might also feel frustrated that there isn’t any money left over to reward you for all your hard work.

In our first blog about some of the biggest challenges facing business owners, we explored managing and improving your cash flow. We also offered tips when it comes to collections (getting paid) and how those challenges affect your business’ cash flow.

In this second edition, we’ll delve into how attracting and retaining good employees as well as sales and marketing can also affect your cash flow – one of the most critical components of a business’ success.

Issue 3: Employees

Your employees are inextricably linked to your cash flow. One of the biggest employee problems many businesses face is finding good ones in the first place, and then motivating and retaining them.

There’s a real need to understand what employees want to ensure they are happy, productive and eager to stay, all of which helps your bottom line.

Please RSVP before 17 October 2017 on 07 3255 1455 or This email address is being protected from spambots. You need JavaScript enabled to view it..

Coral, Mike and the Team

The Wilson Teis Group deliver a large range of services including accounting and business services through Wilson Teis, exit planning and business improvement services through WT Value, bookkeeping through WT Bookkeeping; WT Financial delivers financial planning and investment services; and operations management services are brought to you through WT Operations.WT Financial: Corporate Authorised Representative of Risk and Investment Advisors Australia Pty Ltd AFSL No. 238141

Budget Briefing 2017

"Budget Briefing 2017"

Now that the dust has settled on another Budget we’ve sifted through the detail and picked out some of the planned key changes we think you should be aware of. These measures are subject to parliamentary approval.